Mumbai (Maharashtra) [India], December 26 : The profitability of banks have maintained an upward momentum on the sixth consecutive year in 2023-24, stated the Reserve Bank of India (RBI) in its report on Trend and Progress of Banking in India 2023-24.
The central bank said that the profitability has continued even in the first half (H1) of financial year 2024-25, with the return of assets (RoA) at 1.4 per cent and return on equity (RoE) at 14.6 per cent.
The RBI highlighted that robust credit growth led the expansion of the consolidated balance sheet of scheduled commercial banks (SCBs) during 2023-24.
By definition, consolidated balance sheet is a financial statemet of the bank which shows its liabilities, assets, equity, income, expenses and cash flows.
The report further highlights that the capital to risk weighted assets ratio (CRAR) of SCBs was 16.8 per cent at end-September 2024, with all bank groups meeting the regulatory minimum requirement and the common equity tier 1 (CET1) ratio requirement. The capital to risk weighted assets ratio (CRAR) is a indicator of financial stability of a bank.
The asset quality of Banks have also improved, as per the apex bank report, with the gross non-performing assets (GNPA) ratio falling to its lowest in 13 years at 2.7 per cent at March-end 2024 and 2.5 per cent at September-end 2024.
As per the RBI, the combined balance sheet of urban co-operative banks (UCBs) expanded in 2023-24, with asset quality improving for the third consecutive year while capital buffers and profitability were strengthened.
While unsecured lending shrank and asset quality further improved, the non-banking financial companies (NBFC) sector saw double-digit credit growth, the RBI stated.
By the end of September 2024, the Gross Non-Performing Assets (GNPA) ratio had fallen to 3.4 per cent, and robust capital buffers had maintained the CRAR well above the required level, as per the highlights of RBI's latest report.
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